Endovascular Technologies of Menlo Park to pay $92.4 million in criminal and civil penalties. The maker of a device used to fix a life-threatening condition in heart patients pleaded guilty Thursday to concealing a 1-in-3 malfunction rate during installation, leading to dozens of deaths and surgical emergencies.
Endovascular Technologies of Menlo Park, a subsidiary of the health-care corporation Guidant, agreed in federal court to pay $92.4 million in criminal and civil penalties for not reporting 2,628 serious malfunctions of its Ancure Device in the first 1 1/2 years of sales.
In addition to the monetary penalty the largest imposed anywhere for failure to report malfunctions of a medical device Guidant agreed to cooperate in an ongoing criminal investigation. Charges against company officials could follow, Assistant U.S. Attorney Matthew Jacobs said.
Jacobs’ boss, U.S. Attorney Kevin V. Ryan, said, “Because of the company’s conduct, thousands of patients underwent surgeries without knowing the risks they faced, and their doctors through no fault of their own were unprepared to deal with those risks.”
An estimated 7,632 Ancure devices were sold nationally between introduction of the device in September 1999, and March 2001, when sales were suspended.
The $10,000 device was reintroduced five months later with amended warnings and instructions.
the company has been at the leading edge of interventional cardiology
Although Guidant, which had $612 million in net income last year, may be little known to the public, the company has been at the leading edge of interventional cardiology, one of the most important disciplines of medicine to emerge over the last 25 years.
One of several similar products used in treating abdominal aortic aneurysms, Ancure consists of two portions a graft designed to replace the weakened section of the aorta and a temporary catheter designed to permit insertion of the graft.
In one common malfunction, the catheter became stuck, necessitating slicing of the patient’s aorta to remove it.
The company reported 172 failures to the Food and Drug Administration, concealing the true extent of malfunctions from patients, doctors and the public while distributing accurate data to its own officials, according to the charges.
The data showed 12 deaths and 57 cases in which procedures to implant the device had to be converted to major surgery.
The company also admitted its sales representatives, whose presence during Ancure implantations was required by the FDA, had taught doctors an unapproved technique for dislodging stuck catheters.
case did not involve allegations of malfunctioning grafts following successful implantations
According to the charges, the technique was devised in part by a sales representative.
A case in which it was used and the patient died provoked seven company employees to file an anonymous tip that brought in the government investigators.
The case did not involve allegations of malfunctioning grafts following successful implantations. The Food and Drug Administration said patients already using Ancure 18,000 worldwide, by the company’s estimate were in no special danger.
The company issued a statement Thursday saying “no patient with the Ancure Endograft implant is at risk as a result of this matter, and the implant continues to demonstrate excellent long-term clinical results.”
The guilty plea was entered before U.S. District Judge Susan Illston in San Francisco by marketing vice-president Jim Neupert.
“How did it happen?” the judge asked.
Neupert laid the blame on “a series of events” involving faulty devices and individuals who failed to perform their duties.
But Jacobs said the troubles at Endovascular Technologies were “not the result of error” but of fraud, which the government would prove if the company chose to contest the charges.
Before accepting the plea, Illston also required Neupert to acknowledge that the company intentionally misled the government and consumers and that it had been informed of deaths from use of its product.
20 private lawsuits involving Ancure are pending in the San Jose division of the same federal judicial district
About 20 private lawsuits involving Ancure are pending in the San Jose division of the same federal judicial district.
Less than a month ago a similar batch of private suits against a competing brand made by Medtronic USA was resolved in San Jose under undisclosed terms.
Shares of Guidant fell $2.75, or 6.4 percent, to $40.56 after the government’s charges were announced Thursday.
Guidant still has more steps to take before the government’s civil case is resolved. As part of the agreement with Health and Human Services, both Guidant and its subsidiary are required to put in place corporate integrity agreements that would impose certain obligations.
In exchange for the companies adopting those requirements, the details of which must still be approved by the government, Health and Human Services has agreed not to seek to bar the companies from any government programs, including Medicare.